Friday, November 16, 2018

11/16/2018 - **Overnight Markets and News**

**Overnight Markets and News**

*Dec E-mini S&Ps (ESZ18 -0.67%) this morning are down -0.55% and European stocks are down -0.15% on weakness in technology stocks led by an 18% plunge in Nvidia in pre-market trading after it reported weaker-than-expected Q3 revenue.  Stock indexes are also lower after U.S. Commerce Secretary Ross dampened optimism of an imminent trade deal with China.  Ross said the U.S. still plans to raise tariffs on Chinese imports in January and that President Trump and Chinese President Xi Jinping are likely at best to agree to a "framework" for further talks to resolve trade tensions in upcoming meetings when they meet later his month in Buenos Aires.  Asian stocks settled mixed : Japan -0.57%, Hong Kong +0.31%, China +0.41%, Taiwan -0.30%, Australia -0.10%, Singapore +0.95%, South Korea +0.04%, India +0.56%.  China's Shanghai Composite climbed to a 5-week high on speculation the government will implement policies to spur economic growth, while Japanese stocks moved lower as technology stocks sold-off on weak forecasts from Nvidia and Applied Materials.

*The dollar index (DXY00 +0.04%) is up +0.07%.  EUR/USD (^EURUSD +0.09%) is up +0.05%.  USD/JPY (^USDJPY -0.33%)is down -0.29%.

*Dec 10-year T-note prices (ZNZ18 +0-015) are little changed, up +0.5 of a tick.

*The German Oct wholesale price index rose +0.3% m/m and +4.0% y/y with the +4.0% y/y gain the largest year-on-year increase in 1-1/2 years.

*The Eurozone Oct CPI was left unrevised at +2.2% y/y and the Oct core CPI was also unrevised at +1.1% y/y.

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**U.S. Stock Preview**

*Key U.S. news today includes: (1) Oct industrial production (expected +0.2%, Sep +0.3%), (2) Nov Kansas City Fed manufacturing activity (expected +3 to 11, Oct -5 to 8), (3) Chicago Fed President Charles Evans (non-voter) speaks at a Fixed Income Forum roundtable at an event in Chicago.

*Notable Russell 1000 earnings reports today include: Viacom (consensus $0.96), Helmerich & Payne (0.18).

*U.S. IPO's scheduled to price today: none.

*Equity conferences during the remainder of this week: Bank of America Merrill Lynch Future of Financials Conference on Fri.


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**Overnight U.S. Stock Movers**

*Nvidia (NVDA +2.64%) tumbled 18% in pre-market trading after it reported Q3 revenue of $3.18 billion, weaker than consensus of $3.24 billion.

*Applied Materials (AMAT +4.29%) fell more than 8% in after-hours trading after it forecast Q1 net sales of $3.56 billion to $3.86 billion, well below consensus of $3.96 billion.

*Home Depot (HD -1.41%) was downgraded to 'Neutral' from 'Buy' at Bank of America/Merrill Lynch with a price target of $195.

*Target (TGT -2.85%) was rated a new 'Buy' at Buckingham Research Group with a price target of $102.

*Nordstrom (JWN -3.45%) sank nearly 10% in after-hours trading after it forecast full-year adjusted EPS of $3.55 to $3.65, the midpoint below consensus of $3.63.

*Intel (INTC +2.17%) announced a $15 billion increase in its stock repurchase authorization.

*Viad (VVI +0.61%) was rated a new 'Buy' at Janney Montgomery Scott LLC with a price target of $70.

*Williams-Sonoma (WSM -1.97%) dropped more than 14% in after-hours trading after it forecast full-year adjusted EPS of $4.26 to $4.36, the midpoint below consensus of $4.35.

*Cambrex (CBM -0.77%) was rated a new 'Outperform' at Baird with a price target of $57.

*Shoe Carnival (SCVL -4.87%) climbed more than 13% in after-hours trading after it forecast full-year EPS of $2.36 to $2.38, higher than consensus of $.216.

*Sprouts Farmers Market (SFM -3.71%) was rated a new 'Underperform' a Bernstein with a price target of $23.

*Gogo (GOGO +2.02%) tumbled more than 8% in after-hours trading after it announced that it intends to offer $200 million of convertible senior notes due 2022.

*Sonos (SONO +1.65%) rallied more than 17% in after-hours trading after it reported Q4 revenue of $273 million, higher than consensus of $248.6 million, and then forecast Q1 revenue of $485 million to $495 million, above consensus of $469.4 million.


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**Market Comments**

*Dec S&P 500 E-minis (ESZ18 -0.67%) this morning are down -15.00 points (-0.55%).  The S&P 500 on Thursday recovered from a 2-week low and closed higher: S&P 500 +1.06%, Dow Jones +0.83%, Nasdaq 100 +1.78%.  Bullish factors included (1) U.S. Oct retail sales that rose +0.8% and +0.7% ex autos, stronger than expectations of +0.5% and +0.5 ex autos, (2) strength in technology stocks led by a 5% gain in Cisco after it reported stronger-than-expected Q1 earnings, and (3) an easing of U.S.-China trade tensions after a report said China has outlined a series of potential trade concessions to the U.S.  A negative factor was an increase in geopolitical tensions after the U.S. sanctioned 17 Saudi officials over the death of U.S.-based journalist Khashoggi. 

*Dec 10-year T-notes (ZNZ18 +0-015) this morning are up +0.5 of a tick.  Dec 10-year T-notes on Thursday rose to a 2-week high and closed higher: TYZ8 +2.00, FVZ8 +1.25.  Bullish factors included (1) carry-over support from a rally in British gilts to a 2-1/2 month high as an increase in hard Brexit risks fueled safe-haven demand for government debt, and (2) a decline in inflation expectations after the 10-year T-note breakeven inflation rate slumped to a 10-1/4 month low.  Prices fell back from their best levels after the S&P 500 rebounded from a 2-week low and moved higher.

*The dollar index (DXY00 +0.04%) this morning is up +0.068 (+0.07%), EUR/USD (^EURUSD +0.09%) is up +0.0006 (+0.05%), and USD/JPY (^USDJPY -0.33%) is down -0.33 (-0.29%).  The dollar index on Thursday closed higher: Dollar Index +0.124 (+0.13%), EUR/USD +0.0018 (+0.16%), USD/JPY +0.01 (+0.01%).  Bullish factors included (1) the stronger-than-expected U.S. Oct retail sales, and (2) weakness in GBP/USD which fell to a 2-week low as Brexit concerns increased after several British ministers quit in protest of Prime Minister May's Brexit deal.

*Metals prices this morning are mixed with Dec gold (GCZ18 +0.15%) +1.5 (+0.12%), Dec silver (SIZ18 -0.02%) -0.008 (-0.06%), and Dec copper (HGZ18 -0.15%) -0.004 (-0.13%).  Metals on Thursday closed higher with Dec copper at a 1-week high:  Dec gold +$4.90 an ounce (+0.40%), Dec silver +0.183 (+1.30%) and Dec copper +0.0365 (+1.35%).  Bullish factors included (1) increased safe-haven demand from UK Brexit risks after several British ministers quit in protest of Prime Minister May's Brexit deal, and (2) dovish comments from Fed Chair Powell who said, "we have to be thinking about how much further to raise rates, and the pace at which we will raise rates." 

*Dec WTI crude oil prices (CLZ18 +1.51%) this morning are up +96 cents (+1.70%) and Dec gasoline (RBZ18 +1.77%) is up +2.95 (+1.90%).  Dec crude and gasoline on Thursday settled mixed: Dec crude +$0.21 (+0.37%) and Dec gasoline -0.40 (-0.26%).  Bearish factors included (1) a stronger dollar, (2) the +10.27 million bbl surge in EIA crude inventories to an 11-month high, well above expectations of +3.0 million bbl, and (3) the +0.9% increase in U.S. crude production the week of Nov 9 to an all-time high of 11.7 million bpd.  The main bullish factor was an increase in geopolitical risks after the U.S. imposed sanctions against 17 Saudi officials over the death of U.S.-based journalist Khashoggi. 
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*PLACING TRADES*
HOW TO READ THE MARKET


OK SO IF YOU LOOK AT TODAYS SHEET YOU WILL LOOK FOR YOUR BUY/SELL SIGNALS FIRST.
THE BUY SELL SIGNAL IS LOCATED UNDER THE "POSMOM" & "NEGMOM" COLUMNS.
FOR BUYS SIGNALS YOUR LOOKING FOR EITHER A "311", "411" OR "911"
LIKEWISE FOR SELL SIGNALS.  BUY AND SELL ARE BASED ON THE POS MOM AND NEG MOM
THERE IS ALSO "11"
WHICH MEANS THAT THE MARKET IS LOCKED IN WITH EITHER BULLISH OR BEARISH MOMENTUM. THIS IS ANALOGOUS TO A CONTINUATION PATTERN IN EITHER DIRECTION.
NEXT YOU LOOK AT THE "TREND" COLUMN. IS YOU HAVE A BUY SIGNAL (AS INDICATED ABOVE) THEN YOU KNOW THAT YOU WILL BE TRADING WITH THE TREND IS THERE IS A "3","2" OR "1" IN THE TREND COLUMN.
3 IS A MATURE STAGE 3 TREND. EVERYTHING IS LOCKED IN MOMENTUM WISE. 2 IS A STAGE 2 TREND THAT IS STRENGTHENING AND WILL BECOME A STAGE 3 SOON.
 1 IS THE BEGINNING STAGE OF A TREND THAT DEVELOPING.
NEXT......IS THE MARKET TIMING. THATS WHERE THE PRICE TRIGGERS COME INTO PLAY. FOR LONGS YOU CAN ENTER @ THE "ENTRY" COLUMN OR TAKE A MORE CONSERVATIVE APPROACH (IF THE "52WK" COLUMN IS GREATER THAN THE "ENTRY" COLUMN) AND ENTER AT THE "52WK" TRIGGER.  ONCE YOU HAVE MADE YOUR DECISION YOU SIMPLY PLACE THE TICKET AND WAIT FOR THE MARKET TO COME TO YOU.
*NOTE: THERE IS A FAILSAFE BUILT INTO THE SYSTEM. EVEN WITHOUT LOOKING AT THE POS MOM & NEG MOM YOU CAN JUST USE THE PRICE TRIGGERS THEMSELVES AND ENTER A TRADE. REASON BEING IS BECAUSE IF THE PRICE TRIGGER IS HIT THE MARKET WILL MOVE IN THE DIRECTION AND TAKE YOU ALONG FOR THE RIDE!

*EXITS* - THERE ARE TWO WAYS TO DO EXITS. FIRST YOU CAN EXIT WHEN THE OPPOSITE PRICE TRIGGER IS HIT.

EXITS WORK LIKE ENTRY POINTS. YOU LET THE MARKET COME TO YOU. THE MORE CONSERVATIVE APPROACH IS TO USE THE "STOPLOSS" COLUMN AS YOUR EXIT ON LONG POSITIONS AND USE THE "ENTRY" COLUMN TO EXIT ON SHORT POSITIONS.
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